The case for more Bank of England quantitative easing

For several central banks, cutting interest rates and launching aggressive stimulus packages have been the thing to do in recent months. But when it comes to the Bank of England, the debate has been more mixed.

The current BOE interest rate is already at a record low of 0.5%, where it has stood since March 2009. After a string of solid data over the summer, investors started to speculate whether a rate hike could come as soon as November last year, with economists arguing there was no longer a need for “emergency settings” in monetary policy.

However, the U.K. has not been spared by the recent slide in oil prices, which has hammered the country’s inflation down to the lowest level since 2000.

Even with inflation levels so low, it already seems certain the BOE won’t make any changes to policy at its meeting on Thursday. Peter Dixon, strategist at Commerzbank, explained that the central bank has made it clear that lower interest rates would likely cause more problems than they solve. And when it comes to QE, any positive effect on consumer prices would probably come too late anyway, Dixon said.